The Bank of Korea Says "The Actual Unemployment Rate May Be 0.29%p Higher Than the Official Figure"

'Report on "COVID-19 and Downward Bias in Unemployment Rate"
After COVID-19... "Gap Between Adjusted Unemployment Rate and Official Unemployment Rate Expected to Narrow Gradually"'

Amid the prolonged COVID-19 crisis, the debt of self-employed individuals increased by nearly 10 trillion won in the second quarter (April to June) of this year alone. According to the "2021 Q2 Depository Institutions' Industry-Specific Loan Data" released by the Bank of Korea on the 1st, the outstanding loans from deposit banks to non-corporate enterprises (self-employed) reached 418.5 trillion won at the end of the second quarter, an increase of 9.4 trillion won compared to the previous quarter. The photo shows the lifeless scene of Myeongdong on that day. Photo by Moon Honam munonam@

[Asia Economy Reporter Jang Sehee] The adjusted unemployment rate has been analyzed to be on average 0.29 percentage points higher than the official unemployment rate since the COVID-19 pandemic.

On the 27th, the Bank of Korea stated in its report "BOK Issue Note - COVID-19 and Downward Bias in Unemployment Rate" that "the adjusted unemployment rate was on average 0.29 percentage points higher than the official unemployment rate since the pandemic." This indicates that due to difficulties in job searching after the pandemic, many people who were previously classified as unemployed were instead classified as discouraged workers within the economically inactive population.

Looking at different periods, the gap between the adjusted unemployment rate and the official unemployment rate widened significantly during times when COVID-19 spread rapidly. During the COVID-19 spread periods, restrictions on job searching intensified, causing a greater downward bias in the unemployment rate. During the 1st, 2nd, and 4th waves, the gap between the adjusted and official unemployment rates was 0.29 percentage points, 0.78 percentage points, and 0.68 percentage points, respectively. On the other hand, during the 3rd wave, the difference between the two indicators was not significant, which is attributed to an unusual sharp increase in elderly unemployment due to the end of public job programs at the end of the year.

By demographic structure, the gap was relatively larger among women and youth. Women recorded -0.50 percentage points, and youth recorded -0.74 percentage points. The Bank of Korea analyzed that "this shows that job search activities of women and youth were more affected by government quarantine measures." Additionally, for the youth, the impact was influenced by a high proportion of temporary and daily workers, whose employment numbers significantly decreased after the pandemic.

Furthermore, considering people who inevitably faced difficulties in job searching due to business restrictions, childcare burdens, and self-quarantine resulting from quarantine measures, the actual unemployment rate after COVID-19 may be higher than the official statistics.

The Bank of Korea stated, "Based on the official unemployment rate, the unemployment gap has already turned negative in the second quarter of this year, but based on the adjusted unemployment rate, it is expected to approach the natural unemployment rate in the third to fourth quarters of this year," and predicted, "The gap between the adjusted unemployment rate and the official unemployment rate will gradually decrease as the spread of COVID-19 subsides and social distancing measures are eased."

This content was produced with the assistance of AI translation services.